Savanna Energy Services Corp. announces first quarter 2009 results



    TSX - SVY

    CALGARY, May 7 /CNW/ - Savanna Energy Services Corp. ("Savanna" or "the
Company") is an oilfield services company operating in Canada and the U.S. The
Company's overall business is conducted through two major divisions: contract
drilling and oilfield services.

    
    FINANCIAL HIGHLIGHTS

    (Stated in thousands of dollars, except per share amounts)
    -------------------------------------------------------------------------
    For the three months ended March 31,            2009         2008 Change
    -------------------------------------------------------------------------
                                                       $            $
    -------------------------------------------------------------------------
    OPERATING RESULTS
    Revenue                                       93,794      149,160   (37%)
    Operating expenses                            70,561       95,097   (26%)
    Operating margin(1)                           23,233       54,063   (57%)
    Net earnings(2)                                3,609       25,585   (86%)
      Per share: basic(2)                           0.06         0.43   (86%)
      Per share: diluted(2)                         0.06         0.43   (86%)
    -------------------------------------------------------------------------
    CASH FLOWS
    Operating cash flows before changes in
     working capital(1)                           16,769       48,006   (65%)
    Cash paid on acquisitions and on the
     purchase of property, equipment,
     intangibles and other assets                (26,628)     (20,655)   29%
    Dividends paid                                (1,474)      (1,482)   (1%)
    -------------------------------------------------------------------------
                                                  Mar-31       Dec-31
    FINANCIAL POSITION AT                           2009         2008 Change
    -------------------------------------------------------------------------
                                                       $            $
    -------------------------------------------------------------------------
    Working capital(1)                            49,261       87,680   (44%)
    Property and equipment(2)                    908,673      889,158     2%
    Total assets(2)                            1,019,841    1,038,231    (2%)
    Long-term debt                               176,501      202,274   (13%)
    -------------------------------------------------------------------------
    

    OPERATIONAL HIGHLIGHTS

    The downturn in the North American oil and gas industry resulted in the
lowest first quarter utilization rates in the history of the Company. The
decrease in demand for oilfield services led to a decrease in operating days
and hours in the drilling and oilfield services divisions respectively.
    Previously announced salary and wage roll backs for all non-rig related
employees in the organization were implemented on April 1, 2009; the roll
backs range from 2% to 26% depending on the employees' level of earnings and
result in an average 12% reduction. This better aligns the Company's fixed
operating and administrative costs with the activity decreases and difficult
operating conditions that the oilfield services industry is likely to face
through the remainder of 2009. Additionally, the Company has reduced its
salaried workforce by 20% since January 1, 2009.
    The re-branding and combining of Trailblazer Drilling Corp., Lakota
Drilling Corp. and Akuna Drilling Trust under the banner of Savanna Drilling
has commenced. Effective April 1, 2009 all drilling equipment operated by the
Company will operate under the Savanna Drilling banner, both domestically and
outside Canada.
    During the first quarter, the construction of a service rig was completed
and deployed in Saskatchewan increasing the number of service rigs in that
province to 17.

    
    EQUIPMENT FLEET

    The following table outlines the Company's drilling and service rig fleet
by type of rig:

    -------------------------------------------------------------------------
    As at March 31,                                 2009         2008 Change
    -------------------------------------------------------------------------
    DRILLING RIGS
    Heavy and ultra-heavy telescoping
     doubles                                          45           42      3
    Hybrid drilling                                   46           46      -
    Triples                                            2            -      2
    Pipe-arm single                                    1            1      -
    Conventional shallow/surface/coring                9           10     (1)
    -------------------------------------------------------------------------
    Total drilling rigs (gross)                      103           99      4
    Total drilling rigs (net)(*)                      99           95      4
    -------------------------------------------------------------------------
    SERVICE RIGS
    Service rigs                                      67           56     11
    Coil tubing service units                          8            8      -
    -------------------------------------------------------------------------
    Total service rigs (gross)                        75           64     11
    Total service rigs (net)(*)                       73         61.5   11.5
    -------------------------------------------------------------------------
    (*) 8 drilling rigs and 4 service rigs (2008 - 8 drilling rigs and 5
        service rigs) were owned in 50/50 limited partnerships at March 31,
        2009.
    

    In Q1 2009 the construction of a service rig was completed; the rig,
which is based out of Saskatchewan, is included in the tables above and below.
The Company also has a substantial inventory of drilling and well
servicing-related rental assets and support equipment, as well as a machining
and pipe-inspection facility.
    The following outlines the Company's deployment of its drilling and
service rig fleet by geographic location:

    
    -------------------------------------------------------------------------
    As at March 31,                                 2009         2008 Change
    -------------------------------------------------------------------------
    Drilling Rigs
    Alberta                                           78           83     (5)
    Saskatchewan                                       9            9      -
    United States                                     16            7      9
    -------------------------------------------------------------------------
    Total drilling rigs                              103           99      4
    -------------------------------------------------------------------------
    Service Rigs
    Alberta                                           52           59     (7)
    Saskatchewan                                      17            5     12
    United States                                      6            -      6
    -------------------------------------------------------------------------
    Total service rigs                                75           64     11
    -------------------------------------------------------------------------
    

    Excluded from the above tables are 4 additional drilling rigs Savanna has
committed to construct. These drilling rigs will be heavy-duty doubles capable
of deployment into most basins in which Savanna currently operates. These
rigs, along with additional drill pipe and other equipment to support the
existing fleet, are expected to cost $49 million. To the end of March 2009,
$32.6 million had been expended on these rigs. The remaining capital
expenditures will be funded from cash flows generated from operations, working
capital and/or existing debt facilities, and all equipment should be ready for
deployment by Q3 2009. This capital expansion will enhance Savanna's
capabilities in the deeper directional and horizontal natural gas and oil
drilling plays throughout North America.

    
    CONTRACT DRILLING

    (Stated in thousands of dollars, except revenue per operating day)
    -------------------------------------------------------------------------
    For the three months ended March 31,            2009         2008 Change
    -------------------------------------------------------------------------
    Revenue                                  $    74,584  $   122,309   (39%)
    Operating expenses                       $    55,459  $    78,697   (30%)
    Operating margin(1)                      $    19,125  $    43,612   (56%)
    Number of operating days(*)                    3,414        5,629   (39%)
    Revenue per operating day                $    21,847  $    21,728     1%
    Number of spud to release days(*)(+)           2,857        4,475   (36%)
    Wells drilled(+)                                 864        1,450   (40%)
    Total meters drilled(+)                      795,177    1,273,249   (38%)
    Utilization - Canada(+)                          31%          59%   (47%)
    Utilization - U.S.(+)                            54%          71%   (24%)
    Canadian Industry average utilization(+/-)       36%          55%   (35%)
    -------------------------------------------------------------------------
    (*)    The number of operating days and number of spud to release days
           are all on a net basis which means only Savanna's proportionate
           share of any rigs held in 50/50 limited partnerships have been
           included.
    (+)    Savanna reports its rig utilization based on spud to release time
           for the rigs and excludes moving, rig up and tear down time, even
           though revenue is earned during this time. Savanna's rig
           utilization, spud to release days, wells drilled and total meters
           drilled exclude coring delineation rigs as the operating
           environment is not comparable to the Company's other drilling
           rigs. However, these rigs are included in total fleet numbers.
    (+/-)  Source of industry figures: Canadian Association of Oilwell
           Drilling Contractors.
    

    The drilling division's revenue and operating days decreased in the first
three months of 2009 compared to the same period in 2008, despite a larger and
more geographically diverse fleet, as a result of a downturn in the North
American oil and gas industry. In Q1 2009 Savanna averaged a deployed fleet of
99 net rigs and exited the quarter with the same number compared to Q1 2008
when the Company operated an average fleet of 93 net rigs, exiting that
quarter with 95 net rigs. However, during this difficult period Savanna was
able to maintain its market share of the oilfield services industry.
    In the first three months of 2009 operating costs continued at levels
seen through the second half of 2008. During this period in 2008 operating
costs rose as a result of labour cost increases, fuel cost increases and
increases in the cost of materials and other consumables used in running and
maintaining the drilling rigs. In addition, due to an early spring breakup in
Q1 2009, costs were incurred in racking rigs in Q1 instead of Q2. As a result,
Q1 margins were considerably lower compared to the first quarter of 2008.

    
    OILFIELD SERVICES

    (Stated in thousands of dollars, except revenue per hour)
    -------------------------------------------------------------------------
    For the three months ended March 31,            2009         2008 Change
    -------------------------------------------------------------------------
    Revenue                                  $    19,047  $    24,915   (24%)
    Operating expenses                       $    15,102  $    14,900     1%
    Operating margin(1)                      $     3,945  $    10,015   (61%)
    Number of operating hours(*)                  22,981       30,535   (25%)
    Revenue per hour                         $       721  $       816   (12%)
    Utilization - Canada(+)                          37%          62%   (40%)
    Utilization - U.S.(+)                            53%            -      -
    -------------------------------------------------------------------------
    (*) The number of operating hours is on a net basis which means only
        Savanna's proportionate share of any rigs held in 50/50 limited
        partnerships have been included.
    (+) Utilization is based on standard hours of 3,650 per rig per year. The
        utilization rate excludes the coiled tubing service units since these
        units are not comparable in size or operations to the division's
        service rigs. Industry average utilization figures, specific to well
        servicing, are not available.
    

    The downturn in the North American oil and gas industry also resulted in
a decrease in the oilfield services division's revenue and operating hours for
the first three months of 2009 compared to the same period in 2008. The
decrease in demand for oilfield services is reflected in the lower number of
hours and lower hourly rate compared to Q1 2008.
    Included in the revenue above is $2.5 million related to the rental
assets acquired late in Q3 2008; this revenue is excluded from the per hour
revenue calculations above.
    As with the drilling division, the increased operating costs are
primarily a result of increases in the costs of labour, fuel and other
materials and consumables; the costs of which trended upward in the later part
of 2008 and for the most part held constant in Q1 2009. In addition, an early
spring breakup led to costs being incurred on idle rigs being racked in Q1
instead of Q2. Coupled with downward pricing pressure in the first three
months of 2009, margins decreased significantly compared to the first quarter
of 2008.
    In Q1 2009 the oilfield services division's fleet size averaged 66 (64
net) service rigs, 8 coiled tubing service units and 34 boilers, compared to
Q1 2008 when the division operated an average of 56 (53.5 net) service rigs, 8
coiled tubing service units, and 34 boilers. The oilfield services division
exited the quarter with 67 (65 net) service rigs, 8 coiled tubing service
units, and 34 boilers.

    
    OTHER FINANCIAL INFORMATION

    (Stated in thousands of dollars)
    -------------------------------------------------------------------------
    For the three months ended March 31,            2009         2008 Change
    -------------------------------------------------------------------------
    General and administrative expenses      $     5,393  $     3,758    44%
      as a % of revenue                             5.7%         2.5%   128%
    Depreciation and amortization(2)         $    10,108  $    12,073   (16%)
    -------------------------------------------------------------------------
    

    The increase in general and administrative expenses in Q1 2009 compared
with Q1 2008 reflects Savanna's expansion into new markets over the last
twelve months. Despite the large discrepancy when comparing quarter over
quarter, if compared to Q4 2008 the general and administrative expenses in the
first three months of 2009 are fairly consistent (excluding bad debt and other
non-recurring expenses of $7.5 million incurred in Q4 2008). The increase as a
percentage of revenue in the first quarter of 2009 compared to Q1 2008 is due
to both the increase in general and administrative expenses and the decrease
in revenues year over year.
    Effective January 1, 2009, depreciation of well servicing rigs was
changed to reflect an estimated useful life of 24,000 operating hours and a
20% salvage value. These rigs were previously depreciated on a straight-line
basis over 10 to 15 years with a 20% salvage value. The change, while not
material, has been accounted for on a retrospective basis and more closely
aligns the depreciation policies with those of the Company's drilling rigs
which are depreciated based on operating days. The effect of the change on
individual financial line items is detailed in Note 2 later in this press
release. Therefore, the overall decrease in depreciation and amortization in
Q1 2009 compared to Q1 2008 is primarily a result of the decrease in activity,
as a large portion of the Company's assets are depreciated based on operating
days or hours.

    FINANCIAL CONDITION AND LIQUIDITY

    Savanna's net debt(1) position at March 31, 2009 was $127.2 million and
the amount available on its term revolving credit facility was $74 million.
Cash received on the collection of accounts receivable was used to pay down
the outstanding balance on the facility and fund capital expenditures in the
quarter. As of the date of this release, there was approximately $86.1 million
available on Savanna's term revolving credit facility.

    QUARTERLY RESULTS

    In addition to other market factors, quarterly results of Savanna are
markedly affected by weather patterns throughout its operating area in Canada.
Historically, the first quarter of the calendar year is very active, followed
by a much slower second quarter. As a result of this, the variation on a
quarterly basis, particularly in the first and second quarters, can be
dramatic year-over-year independent of other demand factors. The following is
a summary of selected financial information of the Company for the last eight
completed quarters.

    
    Summary of Quarterly Results
    (Stated in thousands of dollars, except per share amounts)
    -------------------------------------------------------------------------
    Three Months Ended               Mar-31     Dec-31     Sep-30     Jun-30
                                       2009       2008       2008       2008
    -------------------------------------------------------------------------
                                          $          $          $          $
    -------------------------------------------------------------------------
    Revenue                          93,794    139,746    122,205     48,990
    Operating expenses               70,561     98,152     84,207     43,365
    Operating margin(1)              23,233     41,594     37,998      5,625
    Operating margin %(1)               25%        30%        31%        11%
    Net earnings (loss)(2)            3,609   (310,980)    11,285     (6,550)
      Per share: basic(2)              0.06      (5.26)      0.19      (0.11)
      Per share: diluted(2)            0.06      (5.26)      0.19      (0.11)
    Total assets(2)               1,019,841  1,038,231  1,306,339  1,234,481
    Long-term debt                  176,501    202,274    183,301    125,423
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    Three Months Ended               Mar-31     Dec-31    Sept-30     Jun-30
                                       2008       2007       2007       2007
    -------------------------------------------------------------------------
                                          $          $          $          $
    -------------------------------------------------------------------------
    Revenue                         149,160    101,804     93,735     39,097
    Operating expenses               95,097     68,156     58,111     30,271
    Operating margin(1)              54,063     33,648     35,624      8,826
    Operating margin %(1)               36%        33%        38%        23%
    Net earnings (loss)(2)           25,585   (125,637)    12,638     (3,136)
      Per share: basic(2)              0.43      (2.11)      0.21      (0.05)
      Per share: diluted(2)            0.43      (2.11)      0.21      (0.05)
    Total assets(2)               1,243,159  1,180,166  1,299,006  1,242,711
    Long-term debt                  119,428     58,218     44,510     27,034
    -------------------------------------------------------------------------
    

    OUTLOOK

    Although the industry is uncertain with respect to the demand and prices
of oil and gas for the remainder of 2009, and Savanna is certainly not immune
to pricing or utilization pressures caused by the industry slow-down, Savanna
believes it is well positioned with its high quality people and equipment,
leading-edge technology and First Nations partnerships to manage the variable
conditions facing the oilfield services industry.
    The Company does however remain cautious regarding the impact of the
current global economic uncertainty. In order to maintain its balance sheet
strength during this period the Company has also taken measures to align its
fixed operating and administrative costs with the activity decreases and
difficult operating conditions that the Company is likely to face through the
remainder of 2009. The previously announced salary and wage roll backs for all
non-rig related employees in the organization were implemented on April 1,
2009; the roll backs range from 2% to 26% depending on the employees' level of
earnings. This will allow the Company to retain its personnel at a reasonable
cost during a difficult period and at the same time keep people in place for
the eventual return to more favourable operating conditions.
    In addition, the industry has also taken measures to align wages for rig
employees with the decreased operating activity. Effective May 1, 2009, the
CAODC decreased recommended wage levels on average by approximately 15%. The
change should have a positive effect on margins for the remainder of 2009 as
direct labour is the Company's largest operating expense.
    The Company's previously announced project to re-brand and combine
Trailblazer Drilling Corp., Lakota Drilling Corp. and Akuna Drilling Trust
under the banner of Savanna Drilling is under way and should for the most part
be finalized in Q2 2009. Combining these entities will streamline operations
and will provide advantages in purchasing power, recruitment, employee
mobility, and ancillary equipment utilization as well as provide greater name
recognition between Savanna as a whole and its different operating divisions.

    
    Notes:

    (1) Operating margin, operating cash flows before changes in working
        capital, and working capital are not recognized measures under GAAP,
        and are unlikely to be comparable to similar measures presented by
        other companies. Management believes that, in addition to net
        earnings, the measures described above are useful as they provide an
        indication of the results generated by the Company's principal
        business activities prior to consideration of how those activities
        are financed and how the results are taxed in various jurisdictions.

        -  Operating margin is defined as revenue less operating expenses.
        -  Operating margin percent is defined as revenue less operating
           expenses divided by revenue.
        -  Operating cash flows before changes in working capital is defined
           as cash flows from operating activities before changes in non-cash
           working capital.
        -  Working capital is defined as total current assets less total
           current liabilities excluding the current portions of long-term
           debt.
        -  Net debt is defined as long-term debt, including the current
           portions thereof, less working capital.

    (2) Effective January 1, 2009, depreciation of well servicing rigs was
        changed to reflect an estimated useful life of 24,000 operating hours
        and a 20% salvage value. These rigs were previously depreciated on a
        straight-line basis over 10 to 15 years with a 20% salvage value. The
        change in methodology was made to provide more relevant information
        by depreciating the assets based on usage rather than straight-line
        over a set number of years as such a depreciation policy did not
        properly match the economic usage of the well servicing rigs. The
        change, while not material, has been accounted for on a retrospective
        basis and more closely aligns the depreciation policies with those of
        the Company's drilling rigs which are depreciated based on operating
        days. As a result of the change, the following increases (decreases)
        to financial statement line items occurred:

    -------------------------------------------------------------------------
                                  Three months ended Prior to  As at   As at
                                      Mar-31  Mar-31   Jan-1  Mar-31  Dec-31
                                        2009    2008    2008    2009    2008
    -------------------------------------------------------------------------
                                           $       $       $       $       $
    -------------------------------------------------------------------------
    Depreciation and amortization
     expense                            (672)    477     (74)      -       -
    Future income tax expense            188    (145)     23       -       -
    Net earnings                         484    (332)     51       -       -
      Per share: basic                  0.01   (0.01)      -       -       -
      Per diluted share                 0.01   (0.01)      -       -       -
    Comprehensive income                 484    (332)     51       -       -
    Retained earnings (deficit)            -       -      51     943     459
    Property and equipment                 -       -      74   1,321     649
    Future income tax liability            -       -     (23)   (378)   (190)
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF EARNINGS
    (Unaudited - Stated in thousands of dollars, except per share amounts)

    -------------------------------------------------------------------------
    For the three months ended March 31,                    2009        2008
    -------------------------------------------------------------------------
                                                               $           $
    -------------------------------------------------------------------------
    REVENUE
      Sales and services                                  93,794     149,160
    -------------------------------------------------------------------------

    EXPENSES
      Operating                                           70,561      95,097
      General and administrative                           5,393       3,758
      Stock-based compensation                               906       1,036
      Depreciation and amortization(2)                    10,108      12,073
      Interest on long-term debt                           1,645       1,522
      Other (income) expenses                               (196)        107
    -------------------------------------------------------------------------
                                                          88,417     113,593
    -------------------------------------------------------------------------

    EARNINGS BEFORE INCOME TAXES                           5,377      35,567
    -------------------------------------------------------------------------

    INCOME TAXES
      Current                                                 97         882
      Future(2)                                            1,671       9,100
    -------------------------------------------------------------------------
                                                           1,768       9,982
    -------------------------------------------------------------------------

    NET EARNINGS(2)                                        3,609      25,585
    -------------------------------------------------------------------------

    NET EARNINGS PER SHARE
      Basic - net earnings(2)                               0.06        0.43
      Diluted - net earnings(2)                             0.06        0.43
      Weighted average number of shares
       outstanding (000s)                                 58,953      59,323
      Diluted weighted average number of shares
       outstanding (000s)                                 58,953      59,386
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
    (Unaudited - Stated in thousands of dollars)

    -------------------------------------------------------------------------
    For the three months ended March 31,                    2009        2008
    -------------------------------------------------------------------------
                                                               $           $
    -------------------------------------------------------------------------
    Retained earnings (deficit), beginning
     of period(2)                                       (118,960)    167,626
    Dividends                                             (1,474)     (1,482)
    Net earnings(2)                                        3,609      25,585
    -------------------------------------------------------------------------
    Retained earnings (deficit), end of period(2)       (116,825)    191,729
    -------------------------------------------------------------------------



    CONSOLIDATED BALANCE SHEETS
    (Unaudited - Stated in thousands of dollars)

    -------------------------------------------------------------------------
                                                          Mar-31      Dec-31
                                                            2009        2008
    -------------------------------------------------------------------------
                                                               $           $
    -------------------------------------------------------------------------
    ASSETS
    Current
      Cash                                                 8,279       4,178
      Accounts receivable                                 71,532     113,325
      Income taxes receivable                              8,490       7,420
      Inventory                                            5,287       6,032
      Prepaid expenses and deposits                        1,127       1,877
    -------------------------------------------------------------------------
                                                          94,715     132,832
    Notes receivable                                       7,350       7,350
    Property and equipment(2)                            908,673     889,158
    Intangibles and other assets                           9,103       8,891
    -------------------------------------------------------------------------
                                                       1,019,841   1,038,231
    -------------------------------------------------------------------------

    LIABILITIES
    Current
      Bank indebtedness                                    6,133         585
      Accounts payable and accrued liabilities            39,321      44,567
      Current portion of long-term debt                   25,019      18,056
    -------------------------------------------------------------------------
                                                          70,473      63,208
    Deferred net revenue                                   1,647       1,647
    Long-term debt                                       151,482     184,218
    Future income taxes(2)                                82,335      80,484
    -------------------------------------------------------------------------
                                                         305,937     329,557
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY
    Share capital                                        789,841     789,841
    Contributed surplus                                   17,576      16,483
    Deficit(2)                                          (116,825)   (118,960)
    -------------------------------------------------------------------------
                                                         690,592     687,364
    Accumulated other comprehensive income                23,312      21,310
    -------------------------------------------------------------------------
                                                         713,904     708,674
    -------------------------------------------------------------------------
                                                       1,019,841   1,038,231
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Unaudited - Stated in thousands of dollars)

    -------------------------------------------------------------------------
    For the three months ended March 31,                    2009        2008
    -------------------------------------------------------------------------
                                                               $           $
    -------------------------------------------------------------------------
    CASH FLOWS FROM OPERATING ACTIVITIES
      Net earnings(2)                                      3,609      25,585
      Items not affecting cash:
        Stock-based compensation                             906       1,036
        Depreciation and amortization(2)                  10,108      12,073
        Amortization of other assets                         524         187
        Future income taxes(2)                             1,671       9,100
        (Gain) loss on disposal of assets                    (49)         25
    -------------------------------------------------------------------------
                                                          16,769      48,006
      Change in non-cash working capital                  35,886     (84,259)
    -------------------------------------------------------------------------
      Cash flows from (used in) operations                52,655     (36,253)
    -------------------------------------------------------------------------

    CASH FLOWS FROM FINANCING ACTIVITIES
      Shares issued on exercise of stock options               -         279
      Shares repurchased                                       -      (4,137)
      Issuance of long-term debt                               -      70,000
      Repayment of long-term debt                        (27,703)     (8,790)
      Dividends paid                                      (1,474)     (1,482)
      Change in working capital related to financing
       activities                                              -          (7)
    -------------------------------------------------------------------------
      Cash flows from (used in) financing activities     (29,177)     55,863
    -------------------------------------------------------------------------

    CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of property and equipment                 (25,727)    (16,819)
      Proceeds on disposal of assets                         175         119
      Cash paid on acquisitions, net of cash acquired          -      (3,504)
      Purchase of intangibles and other assets              (901)       (332)
      Change in working capital related to investing
       activities                                          1,528        (342)
    -------------------------------------------------------------------------
      Cash flows used in investing activities            (24,925)    (20,878)
    -------------------------------------------------------------------------

    DECREASE IN CASH, NET OF BANK INDEBTEDNESS            (1,447)     (1,268)
    CASH, NET OF BANK INDEBTEDNESS, BEGINNING OF PERIOD    3,593      (7,932)
    -------------------------------------------------------------------------
    CASH, NET OF BANK INDEBTEDNESS, END OF PERIOD          2,146      (9,200)
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
    (Unaudited - Stated in thousands of dollars)

    -------------------------------------------------------------------------
    For the three months ended March 31,                    2009        2008
    -------------------------------------------------------------------------
                                                               $           $
    -------------------------------------------------------------------------
    NET EARNINGS(2)                                        3,609      25,585

    OTHER COMPREHENSIVE INCOME
      Foreign currency translation adjustment              3,929           -
      Unrealized foreign exchange loss on net
       investment hedge                                   (1,927)          -
    -------------------------------------------------------------------------

    COMPREHENSIVE INCOME(2)                                5,611      25,585
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME
    (Unaudited - Stated in thousands of dollars)

    -------------------------------------------------------------------------
    For the three months ended March 31,                    2009        2008
    -------------------------------------------------------------------------
                                                               $           $
    -------------------------------------------------------------------------
    Accumulated other comprehensive income, beginning
     of period                                            21,310           -
      Other comprehensive income                           2,002           -
    -------------------------------------------------------------------------
    Accumulated other comprehensive income, end of
     period                                               23,312           -
    -------------------------------------------------------------------------
    

    SEGMENTED INFORMATION

    (Unaudited - Stated in thousands of dollars)

    The Company's reportable operating segments, as determined by management,
are strategic operating units that offer different products and services. The
Company has three reportable operating segments: corporate, services, and
drilling. The corporate segment provides management and administrative
services to all its subsidiaries and their respective operations. The services
segment provides well servicing services and rental equipment to the oil and
gas industry. The drilling segment provides primarily contract drilling
services to the oil and gas industry through both conventional and hybrid
drilling rigs.

    
    -------------------------------------------------------------------------
    For the three months ended March 31,                                2009

                                  Corporate   Services   Drilling      Total
    -------------------------------------------------------------------------
                                          $          $          $          $
    -------------------------------------------------------------------------
    REVENUE
    Oilfield services                     -     19,047     74,584     93,631
    Rig sales                             -          -          -          -
    Other                                 -         45        118        163
    -------------------------------------------------------------------------
                                          -     19,092     74,702     93,794
    -------------------------------------------------------------------------
    OPERATING COSTS
    Oilfield services                     -     15,102     55,459     70,561
    Rig sales                             -          -          -          -
    -------------------------------------------------------------------------
                                          -     15,102     55,459     70,561
    -------------------------------------------------------------------------
    REVENUE LESS
     OPERATING COSTS                      -      3,990     19,243     23,233
    -------------------------------------------------------------------------
    Depreciation and
     amortization(2)                    326      2,522      7,260     10,108
    Interest on long-term debt        1,516         28        101      1,645
    Earnings before income
     taxes(2)                        (7,170)     1,787     10,760      5,377
    Total assets(2)                 293,032    130,149    596,660  1,019,841
    Goodwill                              -          -          -          -
    Capital assets(2),(i)            23,015    167,817    726,944    917,776
    Capital expenditures(ii)          2,415      1,727     22,486     26,628
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    For the three months ended March 31,                                2008

                                  Corporate   Services   Drilling      Total
    -------------------------------------------------------------------------
                                          $          $          $          $
    -------------------------------------------------------------------------
    REVENUE
    Oilfield services                     -     24,915    122,309    147,224
    Rig sales                             -      1,600          -      1,600
    Other                                 -         15        321        336
    -------------------------------------------------------------------------
                                          -     26,530    122,630    149,160
    -------------------------------------------------------------------------
    OPERATING COSTS
    Oilfield services                     -     14,900     78,697     93,597
    Rig sales                             -      1,500          -      1,500
    -------------------------------------------------------------------------
                                          -     16,400     78,697     95,097
    -------------------------------------------------------------------------
    REVENUE LESS
     OPERATING COSTS                      -     10,130     43,933     54,063
    -------------------------------------------------------------------------
    Depreciation and
     amortization(2)                    181      2,773      9,119     12,073
    Interest on long-term debt        1,148         92        282      1,522
    Earnings before income
     taxes(2)                           751      5,421     29,395     35,567
    Total assets(2)                 324,019    103,459    815,681  1,243,159
    Goodwill                              -     15,789    293,836    309,625
    Capital assets(2),(i)            17,988    128,649    618,503    765,140
    Capital expenditures(ii)          1,512      2,577     16,954     21,043
    -------------------------------------------------------------------------


    The Company operates in two different geographical areas, the breakdown
    of which is as follows:

    -------------------------------------------------------------------------
    For the three months
     ended March 31,                      2009                          2008

                    Canada      U.S.     Total     Canada     U.S.     Total
    -------------------------------------------------------------------------
                         $        $          $          $       $          $
    -------------------------------------------------------------------------
    Revenue         72,988   20,806     93,794    136,556  12,604    149,160
    Total
     assets(2)     821,882  197,959  1,019,841  1,192,180  50,979  1,243,159
    Goodwill             -        -          -    309,625       -    309,625
    Capital
     assets(2)(i)  738,220  179,556    917,776    715,048  50,092    765,140
    -------------------------------------------------------------------------
    (i)    Capital assets include property and equipment, intangibles, and
           other assets.
    (ii)   Capital expenditures include the purchase of capital assets and
           capital assets acquired through business acquisitions in exchange
           for cash.
    

    Cautionary Statement Regarding Forward-Looking Information and Statements

    Certain statements and information contained in this press release
including statements that contain words such as "could", "should", "can",
"anticipate", "expect", "believe", "will", "may", "likely", "estimate",
"predict", "potential", "continue", "maintain", "retain", "grow", and similar
expressions and statements relating to matters that are not historical facts
may constitute "forward-looking information" within the meaning of applicable
Canadian securities legislation and "forward-looking statements" within the
meaning of the United States Private Securities Litigation Reform Act of 1995.
    These statements are based on certain assumptions and analysis made by
the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments, as well as other
factors it believes are appropriate in the circumstances. Further, the
Company's expectation of improving margins for the remainder of 2009, coupled
with retaining adequate personnel for the eventual return of more favorable
industry activity while aligning its cost structure with depressed industry
activity, is premised on the pricing of the Company's services remaining at or
improving from present levels in respect of improving margins and the lack of
mobility of its personnel to other industries at this time in respect of the
retention of personnel. Whether actual results, performance or achievements
will conform to the Company's expectations and predictions is subject to a
number of known and unknown risks and uncertainties which could cause actual
results to differ materially from the Company's expectations. Such risks and
uncertainties include, but are not limited to: fluctuations in the price and
demand for oil and natural gas; fluctuations in the level of oil and natural
gas exploration and development activities; fluctuations in the demand for
well servicing and contract drilling; the effects of weather conditions on
operations and facilities; the existence of competitive operating risks
inherent in well servicing and contract drilling; general economic, market or
business conditions; changes in laws or regulations, including taxation,
environmental and currency regulations; the lack of availability of qualified
personnel or management; and other unforeseen conditions which could impact on
the use of services supplied by the Company.
    Consequently, all of the forward-looking information and statements made
in this press release are qualified by this cautionary statement and there can
be no assurance that the actual results or developments anticipated by the
Company will be realized or, even if substantially realized, that they will
have the expected consequences to or effects on the Company or its business or
operations. Except as may be required by law, the Company assumes no
obligation to update publicly any such forward-looking information and
statements, whether as a result of new information, future events, or
otherwise.

    OTHER

    Savanna will host a conference call for analysts, investors and
interested parties on Friday, May 8, 2009 at 9 a.m. Mountain Time (11 a.m.
Eastern Time) to discuss the Company's first quarter results. The call will be
hosted by Ken Mullen, Savanna's President and Chief Executive Officer and
Darcy Draudson, Vice President Finance and Chief Financial Officer.
    If you wish to participate in this conference call, please call
1-888-892-3255 (for participants in North America). Please call at least 10
minutes ahead of time.
    A replay of the call will be available until May 15, 2009 by dialing
1-800-937-6305 and entering passcode 879031.

    Savanna Energy Services Corp. is a leading North American contract
drilling and oilfield services company providing a broad range of drilling,
well servicing and related services with a focus on fit for purpose
technologies for the North American market and industry-leading aboriginal
relationships.






For further information:

For further information: Ken Mullen, President and Chief Executive
Officer, Darcy Draudson, Vice President Finance and Chief Financial Officer,
Telephone: (403) 503-9990, Fax: (403) 267-6749

Organization Profile

Savanna Energy Services Corp.

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